Disney Settles $20M 'Whistle-Blower' Suit

Published 12:47 pm, Monday, April 25, 2016

Walt Disney Co. has settled a $20-million "whistle-blower" lawsuit brought by a former executive who says she was fired for refusing to help the company allegedly cheat the IRS.

The case, scheduled to go to trial Jan. 27, was settled late last week, the Los Angeles Times reported Monday. The terms were not disclosed.

In her March 2001 suit, Judy Denenholz said she was wrongfully terminated after a series of clashes with the company's chief lawyer. Disney general counsel Louis Meisinger allegedly was angered by her refusal to sign off on Disney's response to an IRS audit.

Denenholz, who was senior vice president of the company's worldwide anti-piracy division, claimed that Disney had substantially understated what it owed the IRS.

In response to the suit, Disney said it had investigated the allegations leveled by Denenholz and found them to be "shameful and untrue."

Meisinger announced Wednesday that he would be leaving the company to serve as an adviser to a Los Angeles law firm and would continue to be a consultant to Disney.

A Disney executive speaking on condition of anonymity told the Times that there was no connection between Meisinger's departure and the case settlement.

The IRS audit focused on how Disney was accounting for taxes stemming from legal and professional expenses incurred in copyright and trademark lawsuits for 1993, 1994 and 1995.

Denenholz said her bosses were angered when she refused to approve a statement to the IRS indicating that Disney owed back taxes of $676,000. She believed the company was omitting millions of dollars in legal expenses.

Soon after, in January 2000, Meisinger told Denenholz her services were no longer needed, according to the suit, ending a nearly 20-year career at Disney.

She sued under the state's labor code that protects a whistle-blower from retaliation by his or her employer. In the suit, Denenholz also accused another former colleague and Disney attorney of sexual harassment.

Disney has said Denenholz was not fired, only that her contract was not renewed after it expired and that her allegations were baseless.